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Competitive analysis is an age-old business practice that loosely means checking out what the competition is doing. Today, many businesses practice this type of intelligence informally by following other brands’ social media pages or reading their latest blog posts, but many corporate strategy experts argue that this is not enough. Efficient competitive analysis occurs when a company thoroughly evaluates the strengths and weaknesses of its competitors and uses the information to advance its own success.
Oftentimes it is more prudent to outsource this type of research to firms specializing in competitive analysis. Part of that includes working with an agency which has “boots on the ground”, who knows the right local experts and can shed light on nuanced elements that may not be discernible by standard open source research.
Identifying competitors
There is a spectrum of types of competitors that can be worthwhile looking at. Potential competitors are businesses that offer the same product or service but not in your market area. A bakery in another city would be considered a potential competitor (since it could start offering deliveries). Indirect competitors are businesses that are in the same category as yours but offer different services. A caterer might be an indirect competitor of a bakery, since they both offer food, but one is for events and the other is for individual consumers. Replacement competitors are businesses that provide an alternative to what you offer, like a local pizza place. Both bakeries and pizzerias can solve the problem of being hungry, which makes them each a replacement competitor of each other. So the first step is understanding who the other players on the field are.
The next steps
Once you have identified your competitors, you can move on to the next steps. While there are no concrete rules to competitive analysis, some of the most common practices include:
● Researching your competitors’ sales tactics and results
● Looking at your competitors’ pricing, including shipping, if relevant
● Analyzing your competitors’ marketing, content, and SEO strategies
● Reviewing their social media presence, strategies, and engagement
● Learning what technology they are using
- Studying their target market to understand nuances in new approaches they may be attempting
Benefits of competitive analysis
As you can see, competitive analysis is not something you can do in a day. A lot of time and resources need to be dedicated to conducting it effectively. But doing it just for the sake of gathering information is not worth anything. The goal needs to be to better your own business. The main benefit of competitive analysis is using the information you gather to improve your own company.
You can do this by:
● Comparing your company against others, then identifying your own niche and what makes your company special
● Identifying what your competitors are doing right and wrong — and learning from them
● Using your competitors as a benchmark to measure your own success and growth (where you all rank on the Google SERP, for example)
Is competitive analysis legal?
Unless you are planning to send someone to break into your competitor’s office and copy confidential information from their servers, there is nothing wrong or illegal about conducting competitor analysis. There are so many legitimate ways to do it, and in most cases, the information is right in front of you.
Content is a major source for competitor analysis. This can include:
● Websites
● Blogs
● White papers
● News articles
● Newsletters
● Social media pages
● Videos
● Webinars
● Paid ads
● Press releases
There are also plenty of legal tools available, some of which are free and others that are paid services. Neil Patel did a great job rounding up some top tools, and even if you briefly peruse the list, you can see right away that competitive analysis is a complex and continuous endeavor. There is a reason that there are a variety of companies that offer this service. Outsourcing these needs to a firm which specializes in this type of research can be a good option for companies who do not have the resources to dedicate towards ongoing competitive analysis.
The most important aspect of outsourcing is to make sure that the company you choose has good reviews and uses unquestionable practices. Researching the competition is an accepted and crucial aspect of corporate strategy, as long as it is done ethically and responsibly. Interfor stands ready to explore these mean streets with you.